Current Conditions in AAII Sentiment Survey Have Been Fulfilled only Eight Other Times Since 1987

Always struggle to find much value in the AAII Sentiment Survey data and commentary.

That said, the conditions in this week’s survey data have been fulfilled only eight other times in history.

Here are the conditions being filtered upon – all were fulfilled in this week’s survey:

1) Bulls < 23%

2) Bulls < historical average for 16 consecutive weeks

3) Bears > 40%

4) Bears > historical average in at least 14 of past 16 weeks

The chart below plots where the other occurrences have been.

Ironically enough, the first occurrences were in November and December of 1990.

This was ~155-160 weeks after the weekly closing low of the 1987 crash and came right on the heels of the ~25%, three-month bear market in summer/fall 1990, as recessionary fears flared.

This week’s signal occurs 176 weeks after the weekly closing low in March 2009.

Lingering post-crash fears and jitters in both periods?  Any insight from this type of psychology?  Likely to be bullish or bearish for future?

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